Microsoft Key management server under development. Enterprise customers can forget about the honor system Microsoft has in place for reporting Windows licenses they consume.

Starting with the release of Vista and "Longhorn" Windows server next year, customers will be required to register their volume license keys (VLK) with Microsoft within 30 days of acquisition and report their license usage on a monthly basis, executives said.

It's a very different system than what is in place today, sources said. "In the enterprise, there is no client activation. You get a master set of bits and a number of licenses. It's always been up to you and an external auditor to verify that you didn't deploy more copies than you had licensed," said one source familiar with the plan, who asked not to be named. "This is designed to formalize the process."

Microsoft is developing key management servers and changing the licensing process for the next generation Windows client and server, executives confirmed recently.

"We are making changes to the process to Vista and a new approach to VLK licensing," Mike Sievert, corporate vice president of Windows client marketing for Microsoft told CRN during a recent interview. "We're training our enterprise customers and we'll do some key management for customers that's more automated and makes reporting easier."

At Tech Ed 2006, Ward Ralston, a senior technology product manager for Microsoft, confirmed the company is "introducing the notion of a key management server" for Windows "Longhorn" Server that will gives volume licensed customers a 30-day validation period to register their license keys. Customers must check in every 30 days to update the licenses used.

According to sources familiar with the plan, Microsoft's key management server would keep track of the active CALs and servers customers deployed and send an audit report in every 30 day.

The policy could further exacerbate concerns of ISVs that specialize in software asset management services for Microsoft software. Microsoft announced plans to acquire AssetMetrix in April.

Microsoft claims the new policy for VLKs will ease software setup and installation and improve asset management. Still, observers also pointed out the software giant wants to cut down on piracy and ensure that it is getting paid for each software license used.

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